Abstract
The present study is an attempt to examine long run relationship among India’s GDP, Exports and Imports for which yearly time series data from 1995 to 2018 has been collected. Data for India’s GDP has been collected from RBI website and India’s export and import data has been collected form Ministry of Commerce and Industry website. The Augmented Dickey-Fuller unit root test for stationarity found that studied variables become stationary at first order of difference. While, Johnson cointegration test revealed long run cointegration between India’s GDP, exports and imports. The results of VECM Granger causality test exhibited bi-directional relationship between India’s GDP and India’s exports, whereas uni-directional relation has been found between India’s GDP and India’s imports. These results have significant implication for India’s export import policy and to achieve a target of $5 trillion economy till 2024-2025.
Highlights
In the era of mercantilism East India Company of Great Britain accumulated wealth in the form of gold reserves through trade for Great Britain
K. (2004) empirical findings of the study confirmed the existence of strong indication of Granger causality from the foreign sector to Growth Domestic Product (GDP) for all the countries, and there is strong sign of bidirectional cause and effect relationship from GDP to exports and imports for all countries apart from the Netherlands, which depicts weaker evidence of existence for the same
Variables LEXP, LGDP and LIMP are non-stationary at levels or in original form
Summary
Great Britain became a developed country and ruled the world Later on, this accumulation of wealth was considered as a crucial dynamic factor in the evolution of society by Adam Smith in his book “Wealth of Nation” (Herlitz, L.1964). Adam Smith criticised the mercantilism approach by arguing that real wealth of a nation consists of availability of goods and services to its citizens For which he developed the theory of absolute advantage of international trade, which was extended by Ricardo who gave theory of comparative advantage of international trade. (2015) found positive impact of trade on economic growth of developed and developing countries Though, he noticed insignificant effects on least developed countries of Africa. The International trade enhance domestic investment in both developing countries and the least developed countries
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